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| Customers walk out of a Lotte Department Store in Myeongdong, Seoul, in this May 9 photo. Yonhap |
Conventional shopping collapses, home shopping remains intact
By Nam Hyun-woo
Domestic retailers' earnings for the second quarter showed stark differences between online and bricks-and-mortar shops in the wake of the COVID-19 pandemic. The profitability of the latter crashed, while that of the former ― including home shopping and other contactless business ― showed noticeable growth.
Lotte Shopping said Friday that it had a 1.4 billion won ($1.18 million) operating profit in the second quarter, down a whopping 98.5 percent from a year earlier. The company's sales reached 4.46 trillion won, down 9.2 percent year-on-year.
The disappointing numbers were attributable to the collapse of its department store and discount chain businesses in the wake of the pandemic.
Lotte Department Store's operating profit declined 40.6 percent year-on-year to 44 billion won on sales of 667 billion won, down 12.3 percent. Its discount chain, which includes Lotte Mart, saw an operating loss expand to 57 billion won from 34 billion won a year ago.
Lotte Shopping already announced in February that it would downsize its businesses by closing 30 percent of its outlets over the next five years. As its second quarter earnings have crashed, downsizing costs are expected to expand its net losses. Lotte Shopping swung to a 199 billion won net loss in the second quarter.
Along with the shopping giant, convenience store chains have also suffered a heavy blow to their balance sheet for the second quarter.
BGF Retail, which runs CU convenience stores in Korea, said its second quarter operating profit declined 27 percent from a year earlier to 44.5 billion won, despite a 2.1 percent increase in sales during the same period.
"The operating profit has been declining since the first quarter due to the negative impact of COVID-19," the company said.
GS Retail, which runs the GS25 convenience store chain, also logged a 23.2 percent year-on-year drop in operating profit for the second quarter this year, blaming the fallout of COVID-19.
While "offline" retailers suffer an impact from the coronavirus, home shopping firms showed unsurprising improvements.
GS Home Shopping said its operating profit in the second quarter rose 27.3 percent from a year earlier to 41.5 billion won, following improvements in both mobile and TV home shopping sales.
The same trend was observed in Lotte Shopping's home shopping business, with its operating profit growing 13.3 percent year-on-year.
The surge in contactless shopping resulted in solid profits for logistics companies too.
CJ Logistics said Friday its operating profit improved by 16.8 percent from a year earlier to 83.9 billion won. The operating profit of its parcel delivery unit spiked 102.6 percent year-on-year to 47.6 billion won.
The protracted COVID-19 pandemic is leading online shopping to grow at a faster pace. According to Statistics Korea, online shopping transactions here in the second quarter amounted to 37.46 trillion won, up 15.2 percent and hitting a new record high.
